Honolulu City Council Budget Chairwoman, Ann Kobayashi, is proposing increasing the property tax for high-priced homes on Oahu. Under Kobayashi's suggestion, all Residential A class properties, which refer to single family homes and condominiums priced at $1 million or more, would be taxed at $6 per every $1,000 of assessed value. This is considerably more than the $3.50 per $1,000 of assessed value that owners are currently paying. However, it should be noted that Residential A class properties does not apply to primary residents, regardless on the value of the home. Kobayashi stated, "Your house can be $10 million, but if you have an exemption, you're still in the residential class, not Residential A. The reason we put the $1 million figure is because we wanted to protect renters, and most people do not rent a home that's more than $1 million." Furthermore under Kobayashi's proposal, hotel and resort properties would be taxed at $12.90 per $1,000 of assessed value. This would be slightly more than the $12.40 that hotel and resorts are currently paying.
The Honolulu Board of Realtors disagrees with Ann Kobayashi's suggestions and notes that the real estate industry defines luxury homes in Hawaii as those valued at $2 million and more. HBR suggests homes below $2 million pay $3.50 per $1,000 of assessed value, those properties that are valued between $2 million and $4 million pay $4.50 per $1,000 of assessed value, and those homes valued at more than $4 million pay $5.50 per $1,000 of assessed value. Julie Meier, the President of the Honolulu Board of Realtors, stated, "We believe the threshold for any additional taxes should begin at $2 million. Any new property tax rate increase will have a negative impact on renters, because any rate increase will be passed onto them. We would like to see the city defer action on this measure until a more equitable, tiered rate structure can be considered."
Source: Honolulu Star Advertiser, 5-13-2014, www.staradvertiser.com
Posted by Jeff Uyemura-Reyes, Principal Broker, REALTOR®
Global Executive Realty, LLC
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